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Friday, December 28, 2007

Monsanto India: Investment Update

I had written about Monsanto India a few days ago. Then, the stock was trading at Rs.1,550. The stock has since moved up to Rs.1,942, a gain of 25%. Have put some more information on the stock in the form of links alongwith an excerpt below:

Link 1:In India, management believes its cotton trait product has the potential to be planted on 15 to 20 million acres by 2010.Worldwide demand for cotton is projected to grow by about 20 million bales or 16 percent in the coming decade, according to an analysis published by Texas Tech University's Cotton Economics Research Institute in May 2007. China will remain on top in production, and the United States will fall to number three. India will rise to the second spot on the heels of recent technological breakthroughs in seed and production practices, according to the forecast.

When Hugh Grant took the top job at Monsanto in May, 2003, the company's nickname in some quarters was "Mutanto." A growing chorus of critics warned that Monsanto's genetically modified plant seeds would wipe out the monarch butterfly, give people virulent new allergies, and reduce the planet's agricultural diversity. Author Jeremy Rifkin predicted that genetically modified organisms (GMOs) would turn out to be "the single greatest failure in the history of capitalism." Paul McCartney urged the world to "say no to GMO." Prince Charles wrote an editorial arguing that genetic engineering takes "mankind into realms that belong to God and to God alone." During the 12 months preceding Grant's elevation, Monsanto's stock price fell nearly 50% to $8 a share. In 2002, the prior fiscal year, the company lost $1.7 billion. "We were pretty financially fragile," recalls Grant, 49, who speaks with the lilt of his native Scotland. Fewer than five years later, Monsanto is thriving. The St. Louis company's net income leaped 44% last year, to $993 million, on $8.5 billion in revenue. Monsanto shares, which closed at $104.81 on Dec. 5, have risen more than 1,000% during Grant's tenure. At 58.6, the company's price-to-earnings ratio is about two points higher than Google's. These numbers reflect a broader story: that Monsanto has quietly turned the tide in the war over genetically modified foods.

Over the last decade, innovation for ag-operational companies has focused more on the input side and how a farmer can get more benefits through seeds, Casale said. The shift has transformed investment in agriculture by both seed and chemical companies," he said. Monsanto spends about 10% of its total sales, which are expected to hit $10 billion next year, on research and development. Syngenta and other major seed producers also have robust research and development budgets and a pipeline of seed and chemical products to show for it. A majority of the spending focuses on genetically modifying seeds in order to produce a higher yield, said analyst Bill Selesky of Argus Research. If one result of global climate change could be increased drought, then drought-resistant corn and other crops would certainly help mitigate this stress," Selesky said. Seeds also are being genetically modified to withstand pesticides, resulting in better crop yields."Today, farmers are getting more bang for their buck," Selesky said.

1 comment:

I do not know the date of your link re: BT Cotton Seeds. However,the listed Monsanto India has hived off this product to a separate Jt. Sector. I understand that presently Monsanto I. is mainly into corn, soybean and cotton seeds. Since, recently, the Maha St. Government has permitted an increase in seed prices, Monsanto stands to gain. There is an upcoming 1:1 Bonus and Rs.10/- divd.j.